The Eagle Is Grounded

While America works to protect intellectual property, everyone else is innovating.

In the late 1960s, the US cargo shipping industry was in trouble. The 2,000-vessel fleet that ruled the seas after World War II had dwindled to fewer than 900. New technologies – containers, automated loading – were taking hold on foreign ships while America clung to old methods. As a result, other countries were transporting nearly 80 percent of worldwide traffic.

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So the government threw a lifeline: the Merchant Marine Act of 1970, which provided new protections and massive subsidies for the industry. As President Richard Nixon described it, the act would "replace the drift and neglect of recent years and restore this country to a proud position in the shipping lanes of the world."

Nathan Fox

It didn't work. Today, US carriers handle barely 2 percent of international cargo. The industry is dominated by nations like Panama and Liberia, so-called flags of convenience, where regulations are lighter and costs lower.

The US fleet was a classic victim of the efforts to save it. Rather than adapt to new economics, the American industry suffocated under overregulation and protectionism. Now the job gets done – goods move efficiently from place to place – but it's a rogue's business, rife with ne'er-do-wells and pirates.

The US is in danger of repeating the mistake, this time with intellectual property. In the face of new technologies and competition, the US is toughening patent and copyright protections. It's leaning on other countries – and its own citizens – to play by ever tighter rules. But if it's not careful, the US will drive its intellectual property offshore into a shadow world that, like shipping, is replete with piracy and rogue states.

That world is fast approaching. As the thicket of protections for IP industries – primarily agriculture, pharmaceuticals, media, and software – grows in the US, alternative ways of thinking are flourishing overseas. Researchers in Australia and India are sidestepping agriculture patents held by the likes of Monsanto and DuPont to develop competitive technologies and foods (such as a high-protein potato) that are, by design, open and unrestricted. In pharmaceuticals, India is skirting patents to create generic AIDS drugs that are orders of magnitude cheaper than those made by the transnational drug companies (see Lawrence Lessig's column on page 83). Media industries, meanwhile, are besieged by millions of MP3 traders and DVD bootleggers in open revolt against copyright protections.

And then there's software. Entire nations are making the leap to Linux. Last year, China began installing the open source operating system on 500,000 computers, with perhaps 200 million more machines on the way. That's bad for Microsoft but good for Linux, as China's vast pool of programming talent turns to developing the software further. (As a monopoly, Microsoft has the same market effect as a spurious patent or overregulation – reducing innovation and increasing prices.)

Taken together, these developments demonstrate how an alternative culture is arising in our midst – or rather, outside it. They reflect the gulf between IP owners, with their rigid sense of controls, and those who would seek to use that intellectual property with all the flexibility afforded by technology – the Internet, in particular. And that's not just a difference of opinion, it's a technological generation gap. As Intel chair Andy Grove recently told The Washington Post, the US needs to reassess its conception of intellectual property "for an era that is the information age as compared to the industrial age."

But so far, IP owners are doing all they can to lock in their old entitlements, pushing for increasingly restrictive laws and enforcement. The result: laughably broad patents (Monsanto claims to have rights to any and all genetic modifications to soybeans, for instance); the Digital Millennium Copyright Act (for five years used as a club to ward off technological innovations in software and media); and lately, patents awarded for software (even though it is already protected by copyright law). The MPAA and RIAA are even seeking permanent antitrust exemptions from Congress to more effectively defend against technology's inevitable progress. The shipping industry tried that one, too.

This conflict sets the stage for a trade war on an unprecedented scale. Last fall's World Trade Organization talks at Canc�n failed in part because poor countries walked out in protest over US and EU intransigence on agriculture and drug patent issues. That's just a sign of the strife ahead; those poorer nations could become the next flags of convenience for a more liberal conception of intellectual property.

There's still time to avoid the shipping industry's fate: American IP owners can stop demanding maximum and extreme protections. The US Patent and Trademark Office can stop taking a head-in-the-sand approach – last summer it strong-armed the World Intellectual Property Organization into canceling a discussion on open source projects – and instead use the WIPO to forge a global policy that works for all nations.

By taking a flexible approach to IP, companies could capitalize on the next wave of innovation rather than shirk from it. But wait too long and this ship will have sailed.